H.R. Syiem, Member (T)

1. This is an appeal filed by M/s. Piya Pharmaceutical Works at Ghaziabad against the order of the Collector of Central Excise, Meerut No. 16 Collr./1982. The order does not bear any date although the party says in its appeal that it is dated 6-10-1982. We shall, therefore, take it as dated 6-10-1982 (There is a faint dated in the photo copy which appears to be 6/10, but no year is shown).

2. In this order the dispute was about M/s. Piya Pharmaceutical's entitlement to exemption under Notification No. 71/78-C.E., dated 1-3-1978. By this notification, about 69 articles and commodities were given exemption under certain conditions. The exemption was total for the goods specified in the table of the notification up to the first 5 lakhs cleared on or after the 1st of April in the financial year by a manufacturer. Condition (a) was that the exemption would not apply to a manufacturer

(i) during the financial year 1978-79, if the aggregate value of the specified goods cleared, if any, by him or on his behalf, for home consumption, from one or more factories, during the period commencing on the 1st day of April, 1977 and ending on the 28th day of February, 1978, had exceeded Rs. 13.75 lakhs; and

(ii) during financial year subsequent to the financial year 1978-79, if such clearances, if any, of the specified goods during the preceding financial year, had exceeded rupees fifteen lakhs.

(There were other conditions also but these two conditions, namely conditions (i) and (ii) of condition (a) are the cause of the dispute and we need, therefore, not reproduce the other conditions).

3. On 30th March, 1979, this notification was amended by another Notification No. 141/79-C.E.; this amending notification besides other-things inserted a third condition in condition (a), and read

"(iii) who manufactures excisable goods falling under more than one item number of the said First Schedule and the aggregate value of all excisable goods cleared by him or on his behalf for home consumption, from one or more factories, during the preceding financial year, had exceeded rupees twenty lakhs".

It also inserted an explanation which is reproduced below

"Explanation IV. - For the purpose of computing the aggregate value of clearances under this notification, the clearances of any specified goods, which are exempted from the whole of the duty of excise leviable thereon by any other Notification issued under Sub-rule (1) of Rule 8 of the afore- said Rules and for the time being in force, shall not be taken into account."

4. When this amendment was introduced on 30th March, 1979, a manufacturer was disentitled to the exemption if in the preceding financial year he produced excisable goods falling under more than one item of the Tariff, and the aggregate value of all such excisable goods, cleared by him during such preceding financial year exceeded Rs. 20 lakhs.

5. The Central Excise found that during 78-79, M/s. Piya Pharmaceuticals cleared goods which fell under Tariff Item No. 14E and Tariff Item No. 68 during the financial year 78-79 valued at Rs. 3,524,497.56 and during 79-80 valued at Rs. 2,826,026.78. Having cleared goods falling under more than one tariff item of values exceeding Rs. 20 lakhs in those years, the Central Excise held that M/s. Piya Pharmaceuticals was disentitled to the exemption in 79-80 and 80-81. They said that M/s. Piya Pharmaceuticals were not entitled to clear medicine free of duty of the value of Rs. 5 lakhs under the Notification 71/78- C.E. and Notification No. 80/80-C.E. (which continued the exemption under 71/78).

6. The Central Excise also charged M/s. Piya Pharmaceuticals with having misdeclared their medicine Piyamycetine Vet as a life saving drug and with having cleared it under exemption Notification No. 116/79 even though the medicine was found not to be covered by that notification. The Collector then ultimately passed his order of 6-10-1982 in which the demanded duty of Rs. 1,09,095.35 (basic) and Rs. 3,